“Beware! It’s forecasting season!”

This question was commonly asked at dinner and drinks parties over the festive break. People’s responses varied depending on what they felt about Trump, Brexit and celebrity deaths – but when quizzed further, it turned out that their personal life hadn’t been affected by any of those events.

Whatever you thought about 2016, history tells us that blips do happen, but they correct themselves over the long-term. When you look at the financial markets over time, you can see that they continually rise, no matter what. Here’s the proof:

Markets 1990 to 2016

Welcome to January – it’s forecasting season!

Despite that, many people are making predictions about what 2017 will bring. The financial pages are filled with ‘expert analysis’, ‘investment outlooks’ and ‘hot stocks’.

To assess whether or not it’s worth listening to them, let’s examine some of last year’s forecasts:

RBS in the Telegraph (Jan 2016): “Deflationary crisis…cataclysmic year…decline in major stock markets of up to 20%…world crude oil prices falling to $16 per barrel…sell everything except high quality bonds.”